Despite the jump in the unemployment rate, today’s jobs report qualifies as very good news. The economy lost 345,000 jobs in May, the smallest loss since October and a significantly smaller one than economists were expecting. The monthly job loss has now declined for four straight months, after a peak decline of 741,000 jobs in January. The report also showed smaller job losses in March and April than the Labor Department had previously estimated.
“What’s happening here is the end of the post-Lehman panic, which hugely accelerated the pace of losses,” Ian Shepherdson, chief United States economist at High Frequency Economics, wrote to clients.
The unemployment rate — now 9.4 percent, its highest level since 1983 — doesn’t usually signal a turning point in the economy. It’s known as a lagging indicator, because it continues to worsen for months even after the economy starts to improve. A better indicator is the monthly change in overall employment, and it suggests the worst job losses of the Great Recession may now be over.
Employers slashed jobs at a much more measured rate than expected in May, even as the unemployment rate soared above 9 percent for the first time in 26 years, the Labor Department said today. According to data that simultaneously show how deep the recession has become and offer hope that it might taper off in the months ahead, a net total of 345,000 net jobs were cut in May — terrible by most standards but the smallest rate of job loss since September.
Economists had expected a much worse loss, of as many as 525,000 jobs. The Labor Department also said that April job losses were somewhat less severe than originally reported.
Meanwhile, the unemployment rate – which is based on a survey of households rather than of businesses – rose to 9.4 percent, from 8.9 percent in April. The last time the jobless rate was that high was 1983.
The information was welcome news, despite the rising jobless rate, because it suggested the furious pace of job losses – which peaked at 741,000 jobs lost in January – is finally easing. It is the strongest evidence yet that the economy’s downdraft of the winter has given way to a more steady, measured decline.
I guess we’ll have to wait until next month to see if it continues to rise, but it is on the way up. And the Consumer Price Index is due out in mid-month [though a deflationary spiral is unlikely at this point].
Are we out of danger? I have only been a self-declared economist for about nine months, but from what I see, it looks like we’re on the way out, even though I expect we have a long "slump" ahead of us. Frankly, I find our resilience truly remarkable. A lot has happened. We’ve had a trillion dollar bail-out, and a trillion dollar stimulus, and the bankruptcy or nationalization of huge financial and industrial sectors. The Republican idiots who caused all of this are screaming their heads off about socialism [they sound like some hopeless drunk blaming his alcoholism on his wife]. And, in spite of all the chaos, our young President just walked into the middle of the muddle of the Middle East and told it like it is – and did it with style.
Now, the question is how resilient are we going to be when Osama bin Laden or the Taliban cook up yet another grand scheme to test us; or when the Republicans claim that the recovery would’ve happened without all the interventions; or when they say that Obama used the recession to take over the country for Karl Marx; or whatever new Talking Point Karl Rove, Newt Gingrich, the silly Fox News-ters, Rush Limbaugh, John Boehner, and/or the Cheney twins role out for the upcoming season.
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